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There’s still time to save the state EITC

The N.C. legislature is working furiously to wind down this tumultuous legislative session – some hope this week. But tax proposals and budget plans are holding things up.

With those issues still unresolved, lawmakers have time to change course on some vital issues. One is the state Earned Income Tax Credit.

In March, lawmakers voted along party lines to eliminate the EITC, passing a stand-alone bill allowing the credit to expire by the end of this year. But the EITC can be restored if money for it is put in the budget.

It should be. This is a program that conservatives in the past have embraced because it does exactly what many want a government program to do – encourage work and not dependency. In fact the federal EITC has been a darling of the GOP. Ronald Reagan called the EITC the “best anti-poverty, the best pro-family, and the best job creation measure” that policymakers have come up with.

It’s good policy to keep the EITC. This refundable tax credit is only available to people who actually work. The credit not only helps keep families afloat who teeter at the edge of the poverty line but studies have shown children whose families get the EITC perform better academically and are more likely to stay in school and graduate. That’s hardly a surprise since the EITC helps provide the financial stability that enables these families to provide the environment and resources their children need to succeed in school.

Studies also show children from families getting the EITC get better jobs and earn more when they graduate. So they wind up contributing more in taxes and other resources to their communities and state than low-wage families who did not get the credit.

More than 900,000 low-wage workers in North Carolina are helped by the EITC. All 100 N.C. counties have recipients. And last week, the Washington, D.C.-based Center for Budget and Policy Priorities and the N.C.-based Budget & Tax Center noted that thousands of N.C. military families take advantage of the credit too.

In fact, the groups said about 64,000 veteran and active-duty military families in North Carolina would be affected by the N.C. legislature’s tax plans, which allow the state’s EITC to expire. And many of these military families, as well as other low-wage N.C. workers, will get little or no benefit from the state’s other tax cut proposals because they don’t make enough to pay any income taxes. They will however see a boost in how much they pay in sales taxes.

Families use this credit for the most basic of needs – groceries, gas, rent, clothing. Losing the benefit will hurt.

That’s especially troubling to hear about military families. Alexandra Sirota, Director at the Budget & Tax Center, notes rightly: “Our troops and veterans have made incredible sacrifices to help keep us safe and it’s our fundamental duty to make sure they can provide for their families. The current tax plans under consideration fail in this most basic duty.”

But it doesn’t have to be that way. There’s still time for N.C. lawmakers to act to ensure this safety net for working families. Restore the EITC in tax plans and the budget before you adjourn.

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